Shawbrook Bank’s pre-tax profit for the fist six- months of 2020 totalled £5.9 million, compared to £55.6 million for the same period last year.
Expected credit loss (ECL) charges recognised on loans and advances to customers were £45.8 million (H1 2019: £4.0 million) and on loan commitments of £1.5 million (H1 2019: £0.1 million ECL credit), highlighting the effect of the Covid-19 pandemic.
Meanwhile, the loan book as of 30 June 2020 was £6.84 billion, up from £6.78 billion six moths prior.
Customer deposits totalled £7.6 billion, compared to £6.1 billion at the end of 2019.
Covid-19 saw more than 98% of employees working from home throughout Q2 2020, with no staff furloughed.
A total of 15.9k payment holidays have been granted to support customers, of which 10.8k are still in force as at 30 July 2020.
Shawbrook’s CEO, Ian Cowie, said: “Since the outbreak of Covid-19, our focus has remained on supporting our staff, customers and partners while at the same time safeguarding the long-term sustainability of our business. When the UK lockdown was announced in March 2020, we acted with speed and agility, moving to an almost entirely remote operation within days. Led by a stable and experienced management team and with the support of new and existing technology, we have continued to operate effectively throughout this period.
“While adjusting our business model to adapt to the changed operating environment, we have remained open for business. To help alleviate the short-term impacts of Covid-19 on our customers, we quickly adopted a series of concession options across our product ranges. In May 2020, we also became a Coronavirus Business Interruption Loan Scheme (CBILS) accredited lender, providing a means of further extending support to our existing SME community.
“Prior to Covid-19, the Group had continued to make good financial progress, starting 2020 with a strong balance sheet and prudently positioned capital and liquidity base. To further optimise the Group’s capital structure, during H1 2020 we initiated a Tier 2 refinancing and, despite the challenging market conditions, successfully completed the £75 million issuance on 10 July 2020. We have also maintained our active position in the UK savings market.
“However, the longer-term economic impacts of the pandemic remain hard to predict and as a result we have recognised expected credit loss (ECL) charges in the period on loans and advances to customers of £45.8 million and on loan commitments of £1.5 million. While this has clearly had an impact on profitability, our capital strength positions us well to support our customers and grow our business in line with appetite as we enter the second half of the year.
“Notwithstanding the pandemic, we have continued to invest in our business to help drive our strategic ambition to become the UK’s specialist SME lender of choice. As well as the ongoing deployment of targeted digital solutions across the property, consumer lending and savings businesses, our investment in the development of a new growth platform in our business finance franchise will serve to further modernise our offering, delivering an enhanced customer journey as well as significant operational efficiencies.
“I would like to convey my thanks to all of our staff who have risen to the current challenge, and shown resilience and professionalism throughout these unprecedented times, while providing the very best service and support to our customers. We continue to work closely with trade bodies, regulators and the industry to ensure we maximise our support to our customers and the wider UK economy.
“In line with our approach to date, in H2 2020, we will continue to focus on supporting all of our stakeholders as we begin to transition to the new state of normal. Although significant uncertainties regarding the broader macroeconomic impact and pace of recovery remain, we are cautiously optimistic in our outlook as we start to see signs of momentum returning to certain of our specialist sectors. Our management expertise and prudent approach to credit decisioning, combined with investment in our digital propositions, means we are well positioned to adapt and respond to opportunities as they arise throughout the second half of the year.”